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  Korea Report - April 2007
  Author : Hwang & Co     Date : 07-05-07 15:00     Hit : 23670    

-FTA between Korea and USA concluded.
-President Roh called off his plan to revise presidential election system.
-Chinese Premier, head of Azerbaijan government, Iraq PM visited Seoul to discuss mutual interest.
-Japans PM made a vague apology on Comfort Women to President Bush.
-Massacre in Virginia by Korean student brought the country to shock in disbelief.
-Six Party talks on NKs nuclear program are in limbo due to an unexpected confusion over the frozen fund in Macau bank.
-South-North economic talks, made a progress in cross-border railways.
-Koreas export rose 17.8% in April.
-Cash reserve ratio of local producers soared above 600% mark.
-SEC profit tumbled in first quarter.
-SEC signed 8 years contract extension with IOC as a premium sponsor of Olympics.
-POSCO took a various measure to protect itself from hostile M&A.
-KOSPI climbed to the peak to 1556.
-Korean yards agreed among themselves to focus on cruiser ships, as an option for the future.
-POSCO indicated to bid for DSME.
-HHI entered 10th largest equity with swelling capitalization in stock market.
-STX held ground-breaking in Dalian for its new yard.
-Golar LNG sold half of its stake in KLC harvesting heavy gain in 3 years.


Seoul and Washington concluded the contentious FTA talks on April 2 in Seoul to create the biggest trade accord ever for Korea and the largest for USA since the North American FTA took effect in 1994.
The FTA could be a chance for Korea to overcome its sandwiched position between Chinas cheap labor and Japans strength of technologies. Korea was smart and lucky enough to clinch a deal with USA before other major economies, such as Japan, China and the EU, seizing the chance to secure a trade deal with more favorable treatment and advantageous conditions with USA. An institute forecasts that US exports will increase by $1.7-3 bil annually and Korean exports by $3.5-4.6 bil. It believes that the pact will help Korea quickly surpass a per capita income of about $20,000 and catapult it up to $30,000. The Korean government expects foreign direct investment will increase by more than $3 bil.
President Rohs approval ratings have jumped by nearly 10%, after successfully clinched a FTA with USA. In an April 3 poll, 32% approved of Roh's handling of state affairs, up by 10% compared to a March survey. The government announced to set up a special fund of KW1.2 tril to support the agricultural, service and manufacturing industries which are expected to face difficulties under the FTA with USA.
The American Farm Bureau objected to SKorea's continued ban on imports of US beef. Korea was one among 60 countries that banned US beef after an animal with mad-cow disease was found in Washington State in Dec 2003. Korea, formerly the third-largest buyer of US beef, resumed imports last year, then rejected shipments after finding bone fragments in the containers. A fully open Korean market for US beef would be worth about $1 bil a year. US trade officials insisted Korea must allow imports of beef before the agreement goes to Congress later this year. The Koreas National Veterinary Research and Quarantine Service finally approved the 6.4 metric tons of American beef from the US state of Kansas safe and free of bone chips in April, for the first time since Dec 2003.
A coalition of activists held massive rallies despite stern measures by police against illegal anti-FTA demonstrations. A fierce political debate over the issue is expected in the Parliament, when the Korean government submits the FTA bill in Sept, just months before the Dec 2007 presidential election and the April 2008 parliamentary elections.
Through the FTA, SKorea can bring USA in as an inside player and gain advantage from its power. SKorea is the second country in the Asia Pacific with which USA has tied both defense treaties and an FTA, following Australia. The FTA can be a tool that insures the alliance and security of SKorea, while the military alliance between USA and SKorea is in the middle of transition and the Bush administration tries to reduce US troops here as well as the agreement to transfer military wartime control.

President Roh Moo-hyun warned to opponents of controversial government regulations on university admission, called the three-nots policy. Top-notch universities and the conservative Grand National Party have slammed the government for pursuing equality in universities education, at the expense of excellence and autonomy. 3 nots stands for to ban universities from taking financial donations for admitting students, using academic differences among the high schools as an admissions criterion, and administering their own tests.

President Roh called off his plan to revise the Constitution to introduce a US style presidential system. Currently, a Korean president can serve only a single five-year term. Roh's proposal had little chance of passing the parliament, as all the political parties reached an agreement earlier this week not to discuss a constitutional revision during Roh's term of office, which is to expire in less than a year, but push for the constitutional revision "in the early stage of the next assembly."

President Roh Moo-hyun and Chinese Premier Wen Jiabao agreed during his 2 days visit in Seoul to set up hotlines between their navies and air forces, and conduct joint naval rescue operations. 2 leaders agreed to establish shuttle flights between Gimpo Airport in Seoul and Hongchao Airport in Shanghai. 2 sides reaffirmed their commitment to a bilateral FTA, and to increase bilateral cooperation for a peaceful settlement of NK's nuclear issue.

President Roh issued a joint declaration with his Azerbaijan counterpart Ilham Aliyev, who visited Seoul with an entourage of over 100 government officials and industrial representatives for 3 day talks outlining their efforts to strengthen bilateral relations centering on energy trade and construction. The Ministry of Construction and Transportation has signed a MOU to offer technology to help develop Azerbaijan's railway and port infra structure. The consortium led by the Korean National Oil Corp, with STX and GS Caltex, is seeking a 20% share in Azerbaijan's Inam oil block, which is expected to yield up to 2 billion barrels of oil. STX Corp has signed on to participate in a project to erect a 20 megawatt wind power plant. Korea will provide Azerbaijan with the technological and industrial expertise that the republic lacks. Azerbaijan opened an embassy in Seoul in Feb. In Feb, Daewoo International Corp agreed to export 1,000 buses worth $60 mil to the area.

Visiting Iraqi Prime Minister Nuri Kamal Al-Maliki requested SKorean businesses' active investment in his country to develop oil fields and rebuild its industrial facilities. The prime minister arrived in Seoul on 11th for a three-day visit. SKorea, which has the third largest number of troops deployed in Iraq, lags behind when it comes to participation in reconstruction businesses. He called on Korean companies to participate in his country's postwar restoration projects. The PM promised to open all sectors, including oil, petrochemicals, roads and power, to Korean companies, asking Korea's experience and advanced technologies for the development.

Japans Prime Minister Shinjo Abe made his first trip to USA as premier for summit talks on NKorea and Iraq. The visit comes at a sensitive time, with US lawmakers discussing a resolution to urge Japan to apologize formally for forcing hundreds of thousands of women into the war time brothels.
A US congressional report rebutted the Japanese PM's claim last month that there was no evidence that "comfort women" were forcibly enslaved, contradicting his own government's earlier report as well as testimony by hundreds of victims from Asian and other countries. 2 leading US republicans argued that Japan organized the subjugation and kidnapping, for the sole purpose of sexual servitude of young women, which was one of the largest cases of human trafficking in the 20th century, and the atrocity was officially commissioned and orchestrated by the government of Japan to include gang rape, forced abortions, sexual violence and other crimes against humanity.
After the meeting with President George Bush, Abe made apology in his own way, saying "I do have deep-hearted sympathies that the people who had to serve as comfort women were placed in extreme hardships and had to suffer that sacrifice." "And that I, as prime minister of Japan, express my apologies, and also express my apologies for the fact that they were placed in that sort of circumstance." Bush called the issue a "regrettable chapter in the history of the world" and added, "I accept the prime minister's apology," while people feel it ridiculous why Abe apologized to Bush not the victims and their relatives, and how Bush accept the apology.

Concerned that the recent massacre by a SKorean student in Virginia, USA, would spark prejudice or confrontation against SKoreans, the Seoul government held emergency meetings to discuss any necessary measures. Leaders from all political groups in SKorea expressed their condolences to the victims and their families after the deadliest shooting in the history of USA. A 23-year-old SKorean student who moved to USA with his parents in 1992 reportedly shot to death at least 33 students and then killed himself, triggering shock and disbelief throughout the nation. President Roh expressed his condolences twice on the day of the shooting.
The number of Korean students studying in USA neared 100,000 in 2006, a 14.8% increase on year, composing 14.9% of the total number of foreign students in USA, which ranked Korea the highest in number of students studying in USA. India is the next with 76,708 students, China with 60,850 and Japan 45,820 students.

Health Ministers from Korea, Japan and China met in Seoul to discuss the issues on the deadly avian influenza virus in 3 countries. As of this year, about 150 people have died after being infected with the virus, including 63 in Indonesia, 42 in Vietnam and 14 in China. Although there have been no human casualties from bird flu in Korea, it has been causing massive financial losses as the government was forced to destroy more than 5 million poultry and has spent about KW45 bil ($48 mil) since 2003.

The average ground-level ozone concentrations across Seoul and its satellite cities have almost doubled over the last 5 years from 0.064 ppm in 2001, 0.090 ppm in 2002, 0.091 ppm in 2004 and to 0.104 ppm in 2005, slightly lower than the standard for issuing an ozone warning, which is 0.12 ppm. The high level has been created by high pollution and daylight UV rays on the earth's surface.

Government report warned that plant and animal spices in almost all forests on the Korean Peninsula face the risk of extinction if the average temperature rises 6 degrees C by the end of the century, forecasting the food shortages, torrid summer heat and rising oceans as a result of the biggest threat to human beings for this century. The average temperature in Korea would jump 1.2 degrees C by 2020 and gradually increase 5 more degrees by 2080, from the average temperature of 13.5 degrees for past 30 years.

National health authorities are moving to allocate a larger budget to reduce the nation's soaring suicide rate. SKorea's suicide rate has risen to the highest level among countries in 30 member OECD, with 24.7 out of every 100,000 people committing suicide in 2005. Suicides now stand as the No 4 cause of death in Korea with 14,000 suicide cases in 2005.
Women accounted for over 42% of the nation's total workforce in 2005, demonstrating the expansion of female influence in Korea's labor pool. The percentage of female workers steadily rose from 40.8% and 40.9% in 2003 and 2004, respectively.
One out of 8 marriages in Korea was of a mixed-race couple last year. Among the 337,000 couples that registered marriage, 39,000 were mixed-race. About 14,400 brides had come from China, followed by 9,800 from Vietnam, 1,400 from Japan, 1,100 from the Philippines, 550 from Mongolia and 380 from Cambodia.


The six-party talks are in limbo due to due to technical confusion over the frozen NKorean funds at a Macau bank. The last round of the talks on March 19 were cut short due to delays in the transfer of $24 mil in NKorean funds and the North's refusal to enter substantive negotiations until the transfer was complete. Based on the Feb 13 agreement, NK was promised the recovery of its funds from Banco Delta Asia, then shut down its main nuclear facilities within 60 days and receive 50,000 tons of heavy fuel oil in return. USA announced not to remove NK from its list of state sponsors of terrorism until progress is made on the Norths kidnapping of Japanese citizens. President George W. Bush said the worlds patience with NK and its leader Kim Jong-il is not infinite.
Japan extended its sanctions against NK for 6 months, citing a lack of progress in resolving the issue of kidnapped Japanese 30. Japan will continue its ban on imports from NK, bar its ships from calling on Japanese ports and forbid its officials from entering Japan. NK has acknowledged kidnapping 13 Japanese citizens in the 1970s and 1980s. It allowed 5 to return to Japan in 2002 and said the rest were dead. Japan insisted at least 17 people were taken and must be accounted for.

NK has recently deployed a newly-developed air-cushioned naval vessel at its frontline bases. NK was believed to operate some 130-140 air-cushioned vehicles able to carry 35 to 55 troops for landing operations. In 1999 and 2002, South and North Korean navies were engaged in bloody skirmishes when they tried to protect their fishing boats on the disputed sea border in the Yellow Sea. Earlier this year, SKorean and US military authorities agreed to jointly develop the upgraded version of 70 mm unguided air-to-air or air-to-ground rockets to destroy NK's hovercraft and speed boats.
The SKorean Navy has deployed newly-built high-speed landing vessels, built by Hanjin Heavy Ind in April. The military has developed the amphibious vessels over the last 5 years. The 155-ton hovercraft runs at a maximum 74 kilometers per hour, carrying 150 troops or a tank and 24 troops.

Japan's intention to purchase the US's newest radar-evading F-22 fighter jets will trigger a "Warm War" in Northeast Asia, along with a heated aerial arms race. The sales would gravely distort the current military balance in the region, as Japan's purchase of F-22s would give the country a further enhanced air dominance, breaking the balance of power in Northeast Asia and provoking China and Russia to push them into a fierce arms build-up competition.
The Defense Ministry has announced to send 350 troops to Dibban, southwestern Lebanon in July to join multinational peacekeeping operations. The troops, mainly comprising infantry, engineering and medics personnel, will be mandated to patrol the streets of Tyre and provide security in nearby areas. A total of 13,000 soldiers from 29 nations are participating to supervise the cease-fire between Lebanon and Israel and to set up a buffer zone between them.

President Roh confirmed that he ordered one of his personal aides to secretly contact NKorean officials in Beijing last Oct for a possible inter-Korean summit, but dismissed criticism that he violated relevant laws in pursuing the secret contact, while opposition lawmakers accused him of having breached his own commitment not to seek a secret channel with Pyongyang and beg for a summit with Kim.

After an almost year-long hiatus caused by NK's missile launches in July 2006, 2 Koreas held their 13th economic cooperation talks for 5 days in Pyongyang. 2 Koreas agreed to test run 2 cross-border railways, one connecting Seoul-Sinuiju on the west side of the peninsula, and the other one that will run through the eastern border, on May 17. Seoul agreed to send 400,000 tons of rice aid to the North beginning at the end of next month. They also agreed to meet on May 2-4 to discuss the South's provision of raw materials for light industry to the North in return for the supply of minerals starting from June. 2 sides also reaffirmed their determination to cooperate in preventing floods of areas near the Imjin River and to implement a project to extract sand from the Han River's estuary.
2 Koreas delegates concluded a three-day Red Cross meeting promising to hold 2 additional rounds of reunions for separated families via video link, as well as one extra round of face-to-face reunions. SKorea had initially proposed holding face-to-face reunions every 2 months and family reunions via video link every month, as well as a separate round of family reunions for SKorean POWs and abductees in the North. But NK insisted to maintain the current system, saying it lacks the manpower to handle the expanded reunion program. The North even threatened to walk out if the South continued to use the term "POWs and abductees," denying holding any SKorean against his or her will. Seoul government data show that 485 SKoreans have been abducted to NK since the end of the Korean War, and that 548 SKorean soldiers were taken prisoner by the North during the three-year war.

The top commander of US forces in Korea renewed the calls for Korea to increase its financial contributions to the maintenance of American troops stationed on the Korean Peninsula to 50-50 ratio. Korea contributed 38% of the total cost burden last year and is set to provide 41% in 2007. Late last year, Seoul and Washington concluded a lengthy negotiation to determine Korea's cost sharing for 2007 and 2008, where the Korean government is to pay KW725.5 bil ($770 mil) over the period. But Bell has expressed intense dissatisfaction, pointing out that US troops stationed in Korea will face serious funding shortfalls amounting to KW100 bil this year.
The government will spend KW3.15 tril ($3.38 bil) next year to develop Pyeongtaek which will host the headquarters of USFK in approximately 2012. The Agricultural Ministry will create a 100,000-sqm high-tech farming area that will cost KW32.5 bil, while the Construction Ministry will secure a 10.6 sq km of land by 2008 to build an industrial complex. The Ministry of Maritime Affairs will pour KW313 bil into increasing the capacity of Pyeongtaek harbor, expanding to accommodate 52 ships by 2011 from current 14.


IMF forecasted that Koreas GDP growth is likely to fall to 4.4% this year from last year's 5%, predicting the same rate for 2008.

Koreas export growth accelerated 17.8% on year to $30.2 bil in April, fueled by strong overseas demand for semiconductors, ships, petrochemicals and steel. Imports increased 19.9% to $29.4 bil, making the trade surplus $800 mil, compared with a $1.4 bil surplus in March. Korea ranked 11th in the world in terms of export of goods in 2006, climbing up one notch from 2005. Korea shipped $326 bil worth of products in 2006, a 15% increase on year. Korea imported goods worth $300.9 bil, up 18%, becoming world's 13th-largest importer. Korean IT exports during the first quarter amounted to $28.75 bil, up 8.3% on year, while imported $15.21 bil worth, up 6.6%.
Korea's current account deficit widened to an 11-month high in March to $1.5 bil, compared to Feb's surplus of $402 mil and from a $426.8 mil gap a year earlier, on increased dividend payments to offshore investors. The deficit on the services account widened to $1.7 bil from $1.5 bil a year earlier.
Foreign direct investment into Korea fell 28% in the first quarter to $1.6 bil, the lowest in 7 quarters on a decline in M&A.

Korea's national debt will soon hit KW300 tril ($322 bil), with the interest on debts reaching KW13 tril. The national debt rose about 3.25% to KW292 tril this year, up from KW282.8 tril at the end of 2006, expected to reach around KW301 tril by the end of this year. The Financial Supervisory Service has asked 36 foreign banks operating here to slow down on overseas borrowing in a bid to curb the country's rising short-term foreign debt.

Korea's Financial Supervisory Commission decided to let life insurance companies list shares on the main stock market as part of efforts to upgrade the industry, expecting to help enhance their transparency and give them a means of expanding capital by selling shares. The first listing expected around the end of the year. Companies which want to go public must retain an internal reserve ratio of 25% and must have generated a profit in the previous fiscal year. The top 3 domestic companies, such as Samsung, Korea and Kyobo Life Insurance, which will enter the market this year, account for 62.8% of the Korean insurance market.


Leaders of Korea's 5 major business bodies called for a change in the government's labor policies, claiming that administration of President Roh became increasingly biased toward the labor unions, while OECD countries focus policies on ensuring the flexibility of the labor market and creation of jobs, rather than giving into union demands for stricter regulations and job protection.
12 chaebol family members held dividends each worth over KW10 bil after the close of fiscal 2006. Also, 173 shareholders were found to have dividends valued at over KW1 bil, and a total of 783 shareholders will be getting dividends worth over KW100 mil this year. The survey was based on chaebol family members, who own or manage companies with assets tallied over KW50 bil.
The April stock rally has propelled 17 new members into the nation's KW100 bil ($108 mil) chaebol club, the number of which jumped to 109 from 85 in Jan. Hyundai Motor Group chairman Chung Mong-gu's equity assets are estimated to be KW2.42 tril, and trailed by HHIs Chung Mong-joon with KW2.11 tril thanks to HHI's recent rally in the market, followed by Shinsegae Group chairwoman Lee Myoung-hee with KW1.78 tril, Lotte Group vice chairman Shin Dong-bin at KW1.69 tril and Samsung Group chairman Lee Kun-hee with KW1.68 tril.
The total cash reserve ratio of local manufacturers marked 635.33% at the end of last year, up 57.34% on year. The ratio among the nation's top 10 business groups soared by 90.63%, from 662.60% at the end of 2005. Samsung Group held the biggest cash holdings rate with 1332.51%, SK with 1288.03% and Lotte 1076.18%, followed by HHI at 970.78% and Hanjin of 858.69%.

Samsung Electronicss (SEC) first-quarter net profit fell 15% on year amid tumbling chip prices, earning KW1.59 tril ($1.7 bil) the worst in 4 years. The short-term outlook for SEC, the world's largest maker of LCD and the world's third-largest mobile phones maker, remains bleak from weak display prices and fierce competition in the global handset market. However, its domestic sales in the same period rose to the highest level in 5 years, reaching KW3.8 tril ($4 bil), the highest since a KW3.2 tril fourth quarter in 2002.
SEC signed an agreement with Microsoft to share patents in a move to facilitate the development of new technologies for both companies. SEC will be able to use Microsoft's current and future technology patents in computers, set-top boxes, DVD players, camcorders, TV sets, printers and home electronics. Microsoft will get access to SEC's existing and future patents applied to digital media and computer-related goods.
SEC has signed an eight-year contract extension with the IOC, keeping the company as a premium sponsor until 2016. Samsung will have global marketing rights for the Beijing Summer Olympics next year, the Vancouver Winter Olympics in 2010, the London Summer Games in 2012, and the games of 2014 and 2016.
Samsung China sponsored to give the light to 6,000 cataract patients living in poor districts in China.

The Hyundai-Kia Automotive Group held a ceremony to mark the completion of the Kia Motor's plant in Zilina in the Slovak Republic with an annual production capacity of 300,000 units. The Slovak plant is its first production base in Europe. Since its completion, the 1 bil euro ($1.36 bil) plant has been producing Kia's small hatchback Cee'd, which was specifically designed to target the competitive European market for compact cars. The plant will produce a total of 105,000 units of the hatchback and 45,000 small sport utility vehicles this year. The Hyundai-Kia Group aims to export a total of 806,000 vehicles to Europe this year.

Koreas biggest refiner SK Corp has been selected as 50-50 joint venture partner with Sinopec Corp to construct a naphtha cracking center, with an annual capacity of 800,000 tons of ethylene, built in Wuhan. It is the first time for a Korean refiner to build such a large plant in China. Total investment will be $1.9 bil.
SKT opened a new test bed center to facilitate the commercialization of China's homegrown third-generation mobile technology known as TD-SCDMA with the attendance of Chinese Premier Wen Jiabao. SKT, the nation's largest mobile-phone carrier, signed a MOU with China in Aug last year, to help China develop its own TD-SCDMA technology. SKT and the Chinese government set up a joint R&D center in Beijing last Feb. SKT bought $1 bil of bonds that can be converted into a 6.7% stake of China Unicom in July last year.

LGE's seven-year legal battle with 2 Taiwanese computer makers, Compal and First International Computer, over PCI, a computer technology patent, ended as the Taiwanese agreed to pay royalties. In July last year, the US Appeals Court for the Federal Circuits struck down the previous decision and raised the LGs hand. LGE has over 2,000 patents in computer technologies. In 2000, Intel signed a licensing deal with LG to use all of LG's PC patents.
LGE, the world's fifth-largest handset maker, has sold 10 million units of its high-end handset Chocolate around the world as of April 20. The model was introduced in domestic market in Nov 2005 and overseas in May 2006. LG's Chocolate phone is the fourth Korean model to hit the 10 million unit mark after 3 of Samsung's handsets.

POSCO, the world's third-largest steelmaker, plans to invest KW225 bil ($240 mil) in hydrogen fuel cell manufacturing plants with a total production capacity of 100 megawatts by 2011. POSCO signed a technology transfer agreement with FuelCell Energy earlier this year.
Around half of POSCOs 17,000 workers have purchased shares, since a campaign named "Buy a POSCO Share" was launched last month to protect the company from possible hostile M&A. Some 59.3% of its 87 million shares are currently owned by foreign investors, causing concern that it could become a takeover target.
POSCO has developed a new no-nickel stainless steel product, which is 50% cheaper than the popular stainless steel with nickel, in consideration of trimming nickel consumption and switching to metal with zero-nickel content.
POSCO and HHI will buy stakes in each other to boost cooperation and strengthen defenses against hostile M&A. POSCO will spend KW346.6 bil ($373 mil) to buy a 1.9% stake in HHI held by HMD. In return, HMD will buy equivalent amount of shares in POSCO. POSCO and Dongkuk Steel Mill, Korea's third-largest steelmaker, also agreed to buy stakes in each others' affiliates. POSCO will buy a 9.8% stake in Union Steel, while Dongkuk Steel will buy the same holding in Pohang Coated Steel. Nippon Steel and POSCO on Oct 20 spend more than $900 mil to increase stakes in each other.

Doosan Infracore, Korea's leading manufacturer of construction equipment, will build a second production facility in the Chinese city of Suzhou. The company entered China in 1992 and has now grown to the No 1 position in the Chinese excavator market, selling 7,582 excavators last year, taking a 20% share of the market. Currently, Doosan Infracore annually produces 15,000 excavators, 4,000 forklifts, 1,000 machine tools in its production base in Yantai. In March, it took over Yantai Yuhua Machinery, a Yantai-based maker of wheel loaders, for 22 mil yuan (KW2.6 bil) and plans to expand its production capacity.
Doosan Heavy Ind, Korea's largest maker of power plants, will supply core facilities for 2 nuclear reactors to be built in China. Westinghouse Electric, which Japan's Toshiba bought last year, will build 4 nuclear reactors in 2 eastern Chinese cities, and Doosan will supply steam generators, reactor vessels and reactor heads.
Doosan Capital, a lease financing unit of Doosan Group, aims to raise its financial assets more than KW5 tril in 5 years. The company is eyeing the fast-growing Chinese market and has formed a new team to seek out chances on the corporate financing for the heavy industry sector there.

Kumho Mitsui Chemicals, a Korean-Japan joint venture, is to spend KW126 bil ($134 mil) to expand its MDI factory to meet growing demand.
American International Group had secured funding totaling $1.6 bil for the construction of a high-rise building in central Seoul.

Hyunjin Group, a Korean real-estate developer, plans to build 2 skyscrapers in Dubai for $250 mil. Space Towers will include office blocks of 41 and 36 floors in the Business Bay waterfront area.
A Korean consortium has agreed to build a new 800-km railway in Congo Republic in return for timber concessions.


The Korea Composite Stock Price Index started the month at 1459, continuously renewed the peak to 1483 riding the global rally, smoothly crossing the 1500 barrier thanks to successful conclusion of FTA, steadily climbed to a peak of 1556 boosted by foreign investors buying streak on shipbuilders high performance and ended at 1542. Dow Jones Index in NYSE broke 13,000 point to continue its surge through the roof.
The exchange rate of KWon maintained stable in the box of 937-929-926-930 against USDollar. The nations foreign reserves amounted to $247.3 bil as of end April, compared with $243.9 bil in March.
Bank of Korea kept its benchmark overnight call rate at 4.5% for an eighth month. The yield on 3 years corporate bond kept firm stance through the month from 5.21% to 5.44%. The national debt continued to grow last year to reach a record-high KW282.8 tril ($302 bil), more than doubled since 2003.
Annual inflation accelerated to 2.5%, the fastest pace in 7 months, from 2.2% in March. Koreas import price grew at fastest pace in almost 3 years to 3.5% in March from 2.6% in Feb, by soaring raw material cost. Korea's jobless rate remained unchanged at 3.2% in March, the lowest in more than 4 years, as builders and finance companies hired workers.


Korean shipbuilders achieved Triple Crown in 2006, taking the global shares more than a third, in receiving order, order backlog and construction. In 2006, Korea won 22 mil CGT out of global 56.08mil, delivered 11.78 mil CGT against worlds 33.89 mil and hold order backlog of 46.54 mil out of 134.2 mil CGT.
CEOs of 5 Korean shipbuilders agreed to initiate a KW40 bil research project on cruise ships, jointly with the government authorities. Facing the challenge from China to build low-end vessels, they found no other option but to switch to the high-end markets for luxury cruise ships and marine plant facilities. Korean shipbuilders see the cruise ship market worth over KW10 tril and global demand for the luxury ships is expected to grow 5% annually.
POSCO set the clear indication to bid for DSME, by purchasing the Korea Development Banks 31.3% and Korea Asset Managements 19.1% stake in DSME.
Japan's JFE Steel raised its steel price by 6-8% for domestic shipbuilders, as its fourth consecutive annual increase and prices could rise further. POSCO raised the price of shipbuilding plate from KW585,000 to KW605,000, following Japanese Steel Mills move, hearing almost no complaint from the yards.
The Korean yards started this year smartly with a satisfactory performance in first quarter. HHI took 47 ships including 6 X VLCC, 3 X 10,000 TEU and 3 x 7900PCTC, worth $4.4 bil, SHI 17 ships including 9 x tanker, 6 x LNGC, 1 x FPSO and 1 x Drillship worth $3.5 bil, DSME 11 ships including 4 x capesize bulkers, LNG and FPSO worth $2.4 bil, and STX secured $1.4 bil worth order including capsize bulkers, product carriers and its first LNG carrier.

The capitalization of HHI reached KW15 tril, entering 10th largest equity in Korean stock exchange market, thanks to its surging share price, which has broken KW200,000 barrier in April from KW120,000 level at the end of 2006.
HHI agreed with Nigerian National Petroleum Corp to establish 'NIKORMA Transport', a LNG shipping company. HHI and NNPC will invest 49-51% respectively.
HHI has acquired Ideal Electronic, based in Mansfield, Ohio, a manufacturer of power generators for gas, steam and rotary machinery. The new firm has been named Hyundai Ideal Electronic Co. HHI's sales of rotating machinery has been growing by 50% in recent years, and the company will aggressively seek growth in the market with the new firm acting as the production base.
HHI won the order from Centrofin for 1 x 160K tanker, India Steamship 1 x 105K coated aframax tanker, Dioryx Maritime 2 x 4,300 teu, Hanjin Shipping 3 x 8,100 teu and 2 x 180K capesize bulkers and Prime maritime 2 x 35K LPG. HMD agreed with Claus-Peter Offen to build 8 x 52K tankers, Rami Ungar's Ray Shipping 10 x 6,800 PCTC, Vroon 2 x 3,500 PCTC and European 4 x 52K pc. Hyundai Samho got from Taiwan Maritime Transport 3 x 7,900 ceu PCTCs and Zim 1 x 10,000 teu.

SHI has recorded net profit of KW90.2 bil ($97.24m) in the first quarter almost six-times on-year earnings increase based on the Sales peaked at KW 1.82 tril, a 24.2% leap on year. SHI bagged the order from an African buyer for 1 x drillship, Orient Overseas Container Line 5 x 4,500 teu container ships and Synergy Marine of Andreas Papathomas 4 x 4,250-teu panamax container ship.

DSME had the orders from Exmar for 1+1 x 150.9K LNG LNGRVs and Europeans 4 x 8,400-teu containerships, and Daewoo-Mangalia  from Tsakos for 2 x capesize bulkers and Hamburg Sud A fifth 6,300-teu boxship. DSME turned into black in first quarter 2007, posting sale of KW1.48 tril up 24.2% on year with operating profit KW50.3 bil from KW137 bil loss last year, and net profit of KW51.9 bil from minus KW45 bil.

STX signed the contract with STX Pan Ocean for 15 x 58K supramax bulker, Ince Denizcilik of Istanbul 2 x 58K bulkers and Quintana Maritime 2 x 181K capsizes bulker. STX announced to target $3 bil sales in 2012 at the ground breaking ceremony in its Dalian shipyard. STX Shipbuilding and its affiliate, STX Corp, will build the yard that constructs bulk carriers and smaller-sized chemical vessels. So far, the shipbuilder has already won $1.1 bil worth of deals to build bulk carriers and other ships there.

Hanjin made agreement with Danaos Shipping for 5 X 3,400-teu boxships and GULMAR of UAE 2 x 6.2K class Diving Support Vessel. Hanjin Subic signed LOI with Transmed for 4 x 175K bulker and Eregli Denizcilik 1+1 x 175K bulker.

Stolt-Nielsen declared options of 4 x 43K parcel tankers at SLS.  SLS also had from Ionia Management for 2+2 x 40K IMO-III chemical tankers. SPP won the order from Dunya Denizcilik for 4 x 113K coated LR2 tankers and Roxana Shipping 3 x 73.5K LR1 coated tankers. Daehan Shipbuilding got Golden Ocean Group for 2+2 x Capesize bulker. Jinse Shipbuilding agreed with Eitzen Chemical for 2+2 x coated 13K chemical carriers and Arne Blystad 6+4 double-hull x 32K bulker. Mokpo had Arklow for 4+2 x 14K general cargo ships, Heunwoo Steel from Jan de Nul NV for 1 x 6.5K bulker, and 21 century Sinochem 4 x 13K pc.

Golar LNG sold its 1 mil shares out of its 2.1 mil stake in Korea Line Corp at KW 66,000 per share, harvesting more than KW46 bil in 3 years. Golar purchased shares at the average price of KW19,700.
Korea Line posted the sale of KW360.1 bil up32.71% on year with operating profit KW47 bil and net gain KW55.6 bil, up 98.4% and 32.81%, respectively.